DUSHANBE, March 7, 2014, Asia-Plus — Weather-related events and increased demand came into play as the FAO Food Price Index registered its sharpest increase since mid-2012, averaging 208.1 points in February 2014, according to press release issued by FAO on March 6. The new level is 5.2 points, or 2.6 percent, above a slightly revised index for January, but is still 2.1 percent lower than last year at the same time.
The figures were released amid news reports of spikes in wheat and corn prices in response to recent developments in Ukraine, though the February increase in the Index cannot be entirely attributed to those events.
The Index, based on the prices of a basket of internationally-traded food commodities, saw price upticks in all commodity groups, with the exception of meat, which fell marginally. The strongest increases since January have been seen in sugar (+6.2 percent) and oils (+4.9 percent), followed by cereals (+3.6 percent) and dairy (+2.9 percent).
The FAO Cereal Price Index averaged 195.8 points in February, up 6.8 points, or 3.6 percent, from the previous month. The price bounce reflected mainly concerns over wheat crops in the United States, a strong demand for coarse grains for both feed and biofuel and high Japonica rice prices. Still, cereal prices remain, overall, 18.8 percent below their level in February last year.
Vegetable oils averaged 197.8 points in February, up 9.2 points (or 4.9 percent) from January, amid concerns over unfavorable weather in Southeast Asia and South America, and buoyant demand worldwide, including demand for palm oil from biodiesel producers.
Dairy averaged 275.4 points in February, a rise of 7.7 points, or 2.9 percent, over January and meat averaged 182.6 points in February, only 0.5 points below the revised January level.
FAO also released its Cereal Supply and Demand Brief, noting a favorable early outlook for wheat production in 2014. With some winter wheat crops already developing, FAO”s first forecast for world wheat production in 2014 stands at 704 million tons. This would represent a drop of 1.7 percent from the 2013 record harvest, but it would still be the second largest crop ever.
As for 2013, the latest estimate for world cereal production stands at a record 2,515 million tons (including rice in milled terms), 13 million tons above the February forecast and 9 percent more than the 2012 level.
The expected increase in global cereal production in 2013 has already resulted in more affordable prices, which in turn are boosting utilization and trade in 2013/14, and helping to replenish world stocks. As a result, the cereal stock-to-use ratio is now estimated to be approaching 24 percent in 2014, its highest level since 2002/03.
Preliminary prospects for cereal production in Low-Income Food-Deficit Countries were looking generally favorable for 2014, according to the new Crop Prospects and Food Situation report, released by FAO”s Global Information and Early Warning System (GIEWS).
